Judge Woods Holds That Assignment of a Patent is Not an Assignment of an “Interest” Under a License to the Patent

On September 28, 2016, District Judge Gregory Woods (S.D.N.Y.) denied defendant YKK Corp.’s (“YKK”) motion to dismiss the suit, in which plaintiffs Au New Haven, LLC (“Au New Haven”) and Trelleborg Coated Systems US, Inc. (“Trelleborg”) (collectively, “Plaintiffs”) allege infringement of U.S. Patent No. 6,105,214 (“the ‘214 patent”) and breach of the license agreement between the inventor and YKK.

In 2002, the named inventor of the ‘214 patent entered into an agreement with YKK granting it the exclusive right to practice the invention claimed in the ‘214 patent. The agreement contained an anti-assignment provision, which states:

Neither party hereto shall assign, subcontract, sublicense or otherwise transfer this Agreement or any interest hereunder, or assign or delegate any of its rights or obligations hereunder, without the prior written consent of the other party. Any such attempted assignment, subcontract, sublicense or transfer thereof shall be void and have no force or effect. This Agreement shall be binding upon, and shall inure to the benefit of the parties hereto and their respective successors and heirs.

In 2006, the inventor assigned the ‘214 patent to Uretek, which assigned it to Trelleborg in 2014 (“the 2014 assignment”). In 2015, Uretek requested YKK’s consent to the 2014 assignment to Trelleborg, and YKK refused.

YKK’s motion to dismiss the suit was premised on its argument that Trelleborg lacks standing to sue for either patent infringement or breach of the license agreement. YKK reasoned that the 2014 assignment was void under the anti-assignment provision because YKK had not consented to it

The court determined that since the anti-assignment provision does not expressly limit transfers of the ‘214 patent or render them void, the question is whether the ‘214 patent constitutes an “interest hereunder,” i.e., an interest under the license agreement, such that the anti-assignment provision could be read to render the 2014 assignment void. The court concluded that the ‘214 patent is not an interest “under” the licensing agreement because it does not originate from the licensing agreement. As a result, the anti-assignment did not render the 2014 assignment void.